Tableau Software Stock Crashes On Weak Guidance, Amazon Threat

Tableau Software (DATA) late Thursday posted Q4 earnings minus items and sales that beat expectations, but shares were down more than 35% in after-hours action amid signs that Amazon.com (AMZN), Microsoft and others were grabbing Big Data market share.

Tableau's outlook for the current quarter missed Wall Street views, at least one analyst said Q4 licensing revenue missed and at least one analyst said the Q4 sales beat lagged many analyst expectations.

Tableau reported earnings minus items of 33 cents, down 21% from the year-earlier quarter but well ahead of the 16 cents expected by analysts polled by Thomson Reuters. But Tableau's net loss, using generally accepted accounting principles, soared to 57 cents a share from 27 cents.

In its earnings release, the maker of Big Data analytics software said its Q4 "tax expense was $34.1 million due to the recognition of a valuation allowance. We believe that it is more likely than not that the benefit from our U.S. federal and state deferred tax assets will not be realized. In recognition of this risk, we have provided a valuation allowance of $46.7 million on the deferred tax assets relating to these jurisdictions."

Q4 revenue rose 42% to $202.8 million, $2 million above analyst estimates, but "the buy side was looking for sales upside of $20 million-plus," William Blair analyst Bhavan Suri wrote in a research note emailed after the earnings release.

License revenue rose 31% to $133.1 million in Q4, but Global Equities analyst Trip Chowdhry said the missed Wall Street expectations and indicated the “market is moving away from (Tableau) products, to alternatives like (Amazon.com's) AWS QuickSight,” financial news site Benzinga reported.

Tableau also gave weak revenue guidance for Q1 and 2016.

In the company's earnings conference call with analysts, Tableau CFO Tom Walker guided Q1 to an 8- to 12-cent loss per share minus items, worse than the 6-cent gain expected by analysts. Walker guided revenue at $160 million to $165 million, up 27% at the high end but well below the $179.5 million analysts expected.

For the year, Tableau sees revenue of $830 million to $850 million, up 30% at the high end but short of the $871 million analysts expected. Its EPS outlook also missed.

In an email, Summit Research analyst Srini Nandury reminded IBD that he’d warned that “Tableau is perceived as expensive.” in a post-Q3 research note.

“We have data and have heard anecdotally that the Tableau solution is the most expensive in the market when compared with" products from rivals Microsoft (MSFT) and Qlik Technologies (QLIK.)

"It would not be a surprise if (Microsoft's) PowerBI finds greater traction with Excel users, precisely the same users Tableau is targeting,” Nandury said.

In a subsequent phone interview, Nandury told IBD "the company is going to remain in the penalty box for a long time to come, basically because they blew up in such a massive scale. They have not only guided down Q1 but they also guided down the full year.

“Microsoft is giving away their software for free. Amazon is coming up with their own ... our thesis on the stock has always been that Tableau is a one-trick pony.”

In a Jan. 15 research note, Nomura analyst Aashiv Shah warned of competition faced by Tableau and Qlik from Microsoft: "Competition is increasing, with (Qlik) partners noting increased customer interest in Microsoft's Power BI, which is a freemium product and sells at a cheaper price compared to Qlik and Tableau. While Power BI continues to lag Qlik and Tableau in terms of user experience and functionality, its lower price point could eventually lead to pricing pressure in the analytics market."

Tableau also competes with much-larger Oracle (ORCL), Splunk (SPLK) and others. Shares of both Splunk and Qlik were down 11% after-hours

Tableau is spending heavy to compete. Research and development costs in Q4 soared 155% vs. the year-earlier quarter, to $17.9 million, while sales and marketing costs rose 135%, to $13.9 million. The company said it hired more than 1,000 employees in 2015, bringing its headcount to more than 3,000. It also opened seven new offices in the year, bringing the number of total offices to 16 worldwide.

"In Q4, a record 3,600 new customer accounts chose Tableau, bringing our total to more than 39,000 worldwide," Tableau CEO Christian Chabot said in the earnings release. "This speaks to the immense popularity of Tableau’s products and continued strong demand from customers around the world."

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